I have been investing most of my own monies seriously since 2003 and my results have been mixed. In the years from 2003 to 2007, I had made good realised gains from sales of equities (stocks and shares) as well as from dividend income. I have also made some realised losses, most noticably since the latter part of 2007 when the sub-prime crisis has led to the downturn in capital markets that sees the STI at 2500 levels unseen for quite a few years.

It’s depressing enough to talk about losses (which will be addressed in another post) but what I want to discuss today is how you can enjoy your investment gains without feeling guilty.

Not spending it all at once

The trick to enjoying your dividends, interest or capital gains is simply not to spend it all. My own rule has been to allow myself to spend 10% of the gains I made while allowing 90% of the gains to be re-invested or to act as a buffer against future losses which is what is happening now.

By spending just this bit of your gains, you reward yourself for taking the calculated risk. Of course, the main objective of investing is NOT TO LOSE MONEY. However, when you make some money, spending 10% or less/more depending on your own preference serves as a positive reinforcement to what you are doing right to grow your investment while serving to keep some buffer against future downside of the market.

So far, this rule has worked well for me as it allows me to partake in some of my gains while allowing me to preserve my gains for future reinvestment.

However, the downside to this rule is that I feel the urge to spend everytime I make some gains from investment. This happens even if I don’t have any particular want at that point in time. So far, I’ve guarded against this urge to splurge but reminding myself that investment values can go up or down and that saving some of the gains helps buffer me against market downturns.

The current market sentiment is largely negative with news of Lehman Brother’s expected bankrupcty casting a pall over sentiment. This is the time when having some cash buffer is important to provide one’s portfolio with some liquidity if needed.